National Debt Paper

Policy makers have a duty to reduce our national debt.  Reforms to our current policies need to be implemented.  High and rising debt harms the economy, and it could impose a large burden on future taxpayers. From a macroeconomic point of view it could also lead to a financial crisis, like we have seen in Greece and other nations.  The total U.S. debt “is currently $19.9 trillion”1 and of that debt the public held piece now totals “more than $13 trillion, or about $107,000 for every household in the nation”2. There are upcoming IOU’s, such as social security for baby boomers and bondholders of U.S. Treasuries Bonds, Notes and Bills, resulting in a big demand on our public money

The government really only has two choices; either increase taxes or reduce spending or come up with a mix of both while still keeping up with inflation and growth.  Borrowing from the other collected funds really should not be an option. It is a “rob perter to pay paul” methodology that in doesn’t help the situation. Policy makers don’t have an easy job and over the last 3 decades Obama, Clinton, Bush, Bush 2, and Regan have tried various macroeconomic measures trying to get the market into a surplus situation to reduce the debt to no avail.  Those policies have resulted in growing our debt to the levels they are today.

Measuring our GDP is a way to keep tabs on what’s going on in the various areas of our economy. It represents the total dollar value of all goods and services produced over a specific time period “it’s a figure that compresses, the immensity of a national economy into a single data point of surpassing density”3.  Many things are measured as part of the GDP calculation, and the health of our economy can implied.  When the economy is healthy, you will see low unemployment and wage increases as businesses demand labor to meet the growing economy. A large swing in GDP, up or down, can has a significant effect on the stock market. On the other hand a bad economy usually means lower profits for companies, which results in lower stock

Prices, negative GDP growth, can be a sign that an economy is going into a recession.

In the long term “a debt that rises too fast –faster than the nominal GDP-for some period of time will impose an opportunity cost in the future.  The cost will be either a permanently higher tax burden, a period of inflation, or a temporary period of reduced government outlays or higher taxes relative to GDP”4.    The decisions of the government can face a large trade off for the future of our country. For whatever reason the policy makers are not seeing this and continue to make decisions that can really harm future generation’s economy.